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Thursday, December 1, 2011

Story:TVS is steadily increasing sales to more than 2 lakh units per month which was reported in September. In October, the company sold 1.85 mn units on maintenance shutdown at its plants for 7-8 days. The company has current capacity of 3mn 2W and 50,000 3W. The company is planning to expand its 3 W capacity from current levels of 6000 p.m. to 8,000 p.m. by April 2012. TVS also plans to launch a new scooter and a new motorcycle in 4Q FY12/1Q FY13, which will be in the executive segment.Management had guided for 15% volume growth for FY 12E at the end of Q1 FY12 and has maintained its guidance, which is achievable with 2 lakh units selling per month from November.YTD, the volumes of the company have grown by 15.3%.Management has estimated the 2 W industry to grow by 12-15% in FY 12, and the company to grow slightly higher than the industry.TVS’s margins are on an improving trajectory on lower input costs and growing 3W sales. Opening of permits in some of the states like West Bengal, Karnataka and Tamil Nadu will also lead to higher 3W sales. Improving product mix, better cost management and operating leverage will assist the company in improving margins.Withdrawal of DEPB benefit is getting compensated by other schemes and possible price hikes in the export markets without hurting margins. However, renewed competition from Honda in the African markets may lower demand for TVS’s products in Africa, which may impact margins.I expect 7.6%/8% standalone EBITDA margins in FY12/13E.On the back of better than expected Q2 numbers, expectations of consistent volume performance going forward, new launches, strong rural demand and improving margins,fy 12-13 should see better performance from the company. At CMP of Rs57, the stock is trading at 9x times FY13E EPS of Rs6.55.A good hold at present levels.

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october 2013

September 2013

Arun.K.Mukherjee

A 26 year old bong lad from the outskirts of kolkata who loves stock markets more than his gfs or anything.Here in the stocks world since when i was 14,started investing in markets with 1000rs which compounded and has turned "a decent respectable portfolio" now.Learning everyday still a novice who intent to put news and stuff which were out of reach to simple retail investors.